Factors That Contribute to Becoming Unbanked

The proportion of US families that are unbanked (i.e., have no type of checking or savings account) has steadily declined for more than two decades. Nonetheless, more than nine million families still do not participate in the financial mainstream, and roughly half these unbanked families previously held a traditional bank account. This study uses the 2004 longitudinal Survey of Income Program Participation to examine the dynamic process within which changes in families' circumstances contribute to their becoming unbanked. Our findings suggest that families are significantly more likely to become unbanked when there is a decline in family income, loss of employment, or loss of health insurance coverage. Race and ethnicity, level of education or family income, and marital or housing status are also important determinants of whether families participate in the financial mainstream or not. To our knowledge, this is the first analysis of the dynamic process by which families change bank status.     

The Effects of Financial Education on the Financial Knowledge of High School Students

This study investigated the effects of a financial education program on high school students' knowledge of personal finance. A comparison of pretest and posttest scores achieved on a reliable and valid thirty-item instrument suggested that the Financing Your Future curriculum increased financial knowledge across many concepts. The scores increased regardless of the course in which the curriculum was used and across student characteristics. The assessment contributes to the growing literature showing that a well-specified and properly implemented program in financial education can positively and significantly influence the financial knowledge of high school students.     

Analyzing Speech to Detect Financial Misreporting

We examine whether vocal markers of cognitive dissonance are useful for detecting financial misreporting. We use speech samples of CEOs during earnings conference calls, and generate vocal dissonance markers using automated vocal emotion analysis software. We begin by assessing construct validity for the software‐generated dissonance markers by correlating them with four dissonance‐from‐misreporting proxies obtained in a laboratory setting. We find a positive association between these proxies and vocal dissonance markers generated by the software, suggesting the software's dissonance markers have construct validity. Applying the software to CEO speech, we find that vocal dissonance markers are positively associated with the likelihood of irregularity restatements. The diagnostic accuracy levels are 11% better than chance and of similar magnitude to models based solely on financial accounting information. Moreover, the association between vocal dissonance markers and irregularity restatements holds even after controlling for financial accounting and linguistic‐based predictors. Our results provide new evidence on the role of vocal cues in detecting financial misreporting.     

A Reexamination of the Tradeoff between the Future Benefit and Riskiness of R&D Increases

Many previous studies document a positive relation between research and development (R&D) and equity value. Though R&D can increase equity value by increasing firm value, it can also increase equity value at the expense of bondholder wealth through an increase in firm risk because equity is analogous to a call option on the underlying firm value. Shi [2003] tests this hypothesis by examining the relation between a firm's R&D intensity and its bond ratings and risk premiums at issuance. His results show that the net effect of R&D is negative for bondholders. We reexamine Shi's [2003] findings and in so doing make three contributions to the literature. First, we find that Shi's [2003] results are sensitive to the method of measuring R&D intensity. When we use what we argue is a better measure of R&D intensity, we find that the net effect of R&D is positive for bondholders. Second, when we use tests that Shi [2003] recognizes are even better than the ones that he uses, we find even stronger evidence of the positive effect of R&D on bondholders. Third, we examine cross‐sectional differences in the effect of R&D on debtholders. Consistent with our main finding, we document a negative relation between R&D increases and default risk. The default risk reduction is also more pronounced for firms with higher initial default scores (where the debtholders have more to gain from an R&D increase) and for firms with more bank debt (where the debtholders have greater covenant protection from the possible detriments associated with R&D increases).     

Market Making in the Options Markets and the Costs of Discrete Hedge Rebalancing

In this paper we provide empirical evidence consistent with the hypothesis that options market makers face risks in managing inventory that are unique to the options markets. In particular, we show that risks associated with the inability to rebalance an option position continuously and uncertainty about the return volatility of the underlying stock each account for a statistically and economically significant proportion of the bid-ask spreads quoted for a sample of Chicago Board Options Exchange options.     

Users versus nonusers of supplements: socioeconomic characteristics

The objective of this research was to determine the socioeconomic characteristics of supplement users versus nonusers. Seven western states (Arizona, California, Idaho, Nevada, New Mexico, Oregon and Wyoming) were surveyed to determine the socioeconomic profile of persons who either use or do not use supplements. Results indicated that 60.2% of the supplement users were female. The largest percentage was 31–40 years of age. By most definitions, supplement users tended to be well educated. Under adverse economic conditions, only a small percentage (7%) of users would give up supplements first when asked to choose from a variety of items that were considered to be nonessential.     

Labor Market Discrimination against Women with Disabilities

This article estimates the extent of wage discrimination and, for the first time, the employment effects of wage discrimination, against women with disabilities. In 1984, more than one-half of the offer wage differential between disabled and nondisabled women is attributable to discrimination, but the absolute wage differential is small. The results suggest that wage discrimination related to disability tends to be most severe for a relatively small group of women with impairments against which prejudice is most intense. There is a large difference between the employment rates of disabled and nondisabled women but only a small part of the differential is attributable to the disincentive effects of wage discrimination. The results also show that women with disabilities face a double burden of gender- and disability-related discrimination, but do not show that gender-related discrimination is worse for women who have a disability.